Update #2: THQ President Responds To Today's Events

Update #2: THQ President Jason Rubin has posted a blog outlining what today's events mean for THQ, its studios, and the games the company is working on.

In a lengthy post addressed to the gaming community, Rubin explains what filing for Chapter 11 means for THQ and why they chose to do it the week before Christmas. Rubin once again stresses that all of the games THQ is currently working on are still on schedule. "The most important thing to understand is that Chapter 11 does not mean the end of the THQ story or the end of the titles you love," Rubin writes. "Quite the opposite is true, actually."

Original Story: THQ just announced that it is filing for Chapter 11 and plans to sells all of its assets.

THQ announced that Clearlake has stepped in as the "stalking horse bidder" for the sale, which includes all four of its studios as well as the games they are currently working on. A stalking horse bid (as defined by Investopedia) is the first bid on a bankrupt company's assets, and is designed to prevent the troubled company from being low-balled. In essence, it sets a minimum price – in THQ's case, roughly $60 million – for the company. Other companies are now free to make higher bids for THQ to consider.

The studios for sale are Volition (Saints Row), Vigil Games (Darksiders), THQ Phoenix, and THQ Wireless.

The press release notes that THQ's foreign studios are not included in the agreement, which includes Relic Entertainment (Warhammer, Company of Heroes) and THQ Montreal, where Patrice Désilets is currently working on an unannounced project. The press release also states that THQ will continue working uninterrupted as the sale proceeds. THQ Chairman and CEO Brian Farrell characterized the Chapter 11 filing and sale as the "...necessary next steps to complete THQ's transformation and position the company for the future..."

THQ's financial troubles have been apparent for months, and led to the publisher practically giving away many of its recent titles in a THQ Humble Bundle. We hope the sale will provide the company and its studios the financial stability it needs to continue making games for its fans.

AGOURA HILLS,
Calif.--(BUSINESS WIRE)-- THQ Inc.
(NASDAQ: THQI), a leading worldwide developer and publisher of interactive
entertainment software, today announced that it entered into an Asset Purchase
Agreement with a "stalking horse bidder," affiliates of Clearlake Capital
Group, L.P., to acquire substantially all of the assets of THQ's operating
business, including THQ's four owned studios and games in development. The sale
will allow THQ to shed certain legacy obligations and emerge with the strong
financial backing of a new owner with substantial experience in software and
technology.

To facilitate the
sale, THQ and its domestic business units have filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Court for the District of Delaware. The
company's foreign operations, including Canada, are not included in the
filings. The company has obtained commitments from Wells Fargo and Clearlake
for debtor-in possession (DIP) financing of approximately $37.5 million,
subject to Court approval.

THQ will continue
operating its business without interruption during the sale period, subject to
Court approval of THQ's first-day motions. All of the company's studios remain
open, and all development teams continue. The company remains confident in its
existing pipeline of games. THQ maintains relationships with some of the top
independent development studios around the globe. As part of the sale, the
company is seeking approval to assume the contracts of these studios, and
Clearlake will assume these contracts.

"The sale and
filing are necessary next steps to complete THQ's transformation and position
the company for the future, as we remain confident in our existing pipeline of
games, the strength of our studios and THQ's deep bench of talent," said Brian
Farrell, Chairman and CEO of THQ. "We are grateful to our outstanding team of
employees, partners and suppliers who have worked with us through this
transition. We are pleased to have attracted a strong financial partner for our
business, and we hope to complete the sale swiftly to make the process as
seamless as possible."

According to
Jason Rubin, who joined THQ as President last May, "We have incredible, creative
talent here at THQ. We look forward to partnering with experienced investors
for a new start as we will continue to use our intellectual property assets to
develop high-quality core games, create new franchise titles, and drive demand
through both traditional and digital channels."

Clearlake has
agreed to serve as the "stalking horse bidder" for a Section 363 sale process,
which allows other interested parties to come forward with competing bids.
Aggregate consideration offered by Clearlake for the purchase totals
approximately $60 million, including a new $10 million note for the benefit of
the company's creditors. The company is asking the Court for a schedule to
complete the sale process in about 30 days.

Consumers and
retailers should see no changes while the company completes a sale. The new
financing will support business operations throughout the period. THQ does not
intend to reduce its workforce as a result of the filing, and employees will
continue to work their usual schedules and receive normal compensation and
benefits, pending customary Court approval.

As is the case
after a Chapter 11 filing, THQ expects to receive notice from NASDAQ informing
the company that its shares will be delisted from the exchange within nine
calendar days of notification.

THQ is being
advised by Centerview Partners LLC and FTI Consulting as its financial advisors
and Gibson, Dunn & Crutcher as legal counsel. Clearlake is being advised by
DLA Piper as legal counsel.